What distinguishes a market economy

Social market economy

The term social market economy describes the economic order of the Federal Republic of Germany. Its basic element is the connection between "the principle of freedom in the market and that of social equality".

The concept of the social market economy was developed for the reconstruction of the Federal Republic of Germany after the Second World War as an alternative to a state-controlled economy. Their political implementation in the years 1947 to 1949 is associated with the names Ludwig Erhard and Alfred Müller-Armack. Müller-Armack also coined the term "social market economy".

The core idea of ​​the social market economy is that a functioning economic order does not arise by itself, but has to be created and maintained by the state. The most important elements in the conception of the social market economy:

  • Private ownership of the means of production and free pricing
  • Establishing a competition regime and securing competition (e.g. through the Cartel Act, Act against Unfair Competition)
  • conscious economic and growth policy
  • Securing full employment
  • Freedom of foreign trade, free currency exchange
  • Policy of stable monetary value (e.g. through an independent central bank)
  • Social security, social justice and social progress (through state redistribution measures in the form of social assistance benefits, social pensions and compensation payments, subsidies, grants, progressive income tax, etc .; through the social security systems: pension, health, unemployment and long-term care insurance, accident insurance; through a Work and social order)

The social market economy is not a closed, but an open system. It can and must be checked and improved in the event of new values ​​and insights. (Lb)